Monitor announces result of consultation on interpretation and application of the Private Patient Income Cap

16th December 2008

Monitor, the independent regulator of NHS foundation trusts, has announced that income from all joint venture and associate arrangements will count towards the foundation trust Private Patient Income (PPI) cap.

The decision follows a public consultation on the rules that NHS foundation trusts must follow in relation to the legal ‘cap’ on the income they may earn from charges for services to private patients. The consultation and further reconsideration of Monitor’s application of the PPI cap was prompted by a legal challenge from UNISON.

Today’s decision means that all income arising from joint ventures and associates where the foundation trust is not in overall control will come under the PPI cap.

The outcome represents a change to Monitor’s previous position, whereby income was included in the PPI cap only from those services provided to private patients directly by the foundation trust or via a subsidiary.While the majority of respondents to the consultation favoured retention of the current rules, the Monitor Board has accepted that in some respects the rules operated to date should be modified to produce a more restrictive regime.

The Board was not persuaded, however, by the legal arguments presented by UNISON that any income ultimately derived from private patient charges, regardless of whether or not the NHS foundation trust itself supplied the goods and services, should be included in the PPI cap. This approach is considered to be unworkable and capable of absurdity if adopted in its entirety.

Dr William Moyes, Executive Chairman of Monitor, said:

“Having given careful consideration to all the consultation responses, our board recognises the arguments for treating joint venture and associate arrangements in the same way as subsidiaries to the trust and therefore considers that income derived from these should be brought in under the cap.

“Establishing clear, coherent and workable rules to apply the cap is not a simple task. This is a complicated issue and this was demonstrated in the variety of responses that we received to the consultation and the divergence of views contained.

“Monitor has consulted on the application of the cap four times. Today’s decision shows the Board ensuring that we retain a workable option with a coherent set of rules which are consistent with the law.”